I'd feel a lot better about myself if more poor asses posted on this thread. pls help.

I've been doing a lot if planning around how much I need to save and thought the formula was interesting.

Doing some quick calcs and found the following:

For someone starting working in 2004 at 55k/yr, averaging 5% raises and saving 10% per year and investing in s&p500.

That person would have had $78k in savings last year under the assumption they turned 30 in 2012. The age x salary/10 would equal $244k

I realize that the calculation is for net worth but like others I don't think the formula is valid for younger folks.

Even if you average 10% raises and save 20% of pretax income, the money is only $190k.

Like I said interesting

The 'rule of thumb' calculation you are referring to is pretty linear when you chart it out, when, in fact, investing is not. Due to compound interest, your total investments grow much larger the longer you go out in the series (a.k.a. the older you get, assuming average returns are positive and you keep contributing the same or more each period), so I am like you. It is not a good calculation to go by for younger people, especially for the '30 year old' in the example.


[This message has been edited by gigemboy (edited 6/22/2013 5:40p).]